simonshields
@isp.com

Here the Court of Appeal, in the context of a class action, considers the factors involved in a court taking jurisdiction simpliciter over a matter involving foreign defendants:

(i) The Evolution of the Real and Substantial Connection Test

[51] As Lebel J. observed at para. 66 of Van Breda, striking a proper balance between flexibility and predictability, or between fairness and order, has been a constant theme in Canadian jurisprudence on jurisdiction.

[52] Starting in 1990 with the Supreme Court’s decision in Morguard Investments Ltd. v. De Savoye, 1990 CanLII 29 (SCC), [1990] 3 S.C.R. 1077, and continuing with this court’s decision in Excalibur, overturning Perell J.’s decision in 2014 ONSC 4118 (CanLII), and for which leave to appeal was refused, the real and substantial connection test has been a dominant, although not exclusive, test governing the issue of jurisdiction.

[53] In Morguard, the Supreme Court addressed jurisdiction in the context of extra-provincial enforcement of judgments. Justice La Forest noted at pp. 1108-1109 that the real and substantial connection approach to jurisdiction provides a reasonable balance between the rights of the parties. In Beals v. Saldanha, 2003 SCC 72 (CanLII), [2003] 3 S.C.R. 416, the Supreme Court expanded the application of the real and substantial connection test to the recognition of foreign judgments. Justice Major held at para. 23 that a substantial connection with the subject matter of the action will satisfy the test even in the absence of such a connection with the defendant in the action. Accordingly, a Canadian court could assume jurisdiction if the foreign court had a real and substantial connection with the subject matter of the action or the parties. Justice Major further noted at para. 37 that the presence of traditional indicia of jurisdiction such as attornment, consent, residence, and presence serve to bolster the real and substantial connection.

[54] In Van Breda, a case dealing with the assumption of jurisdiction in tort actions, Lebel J. observed that, in developing the real and substantial connection test, the Supreme Court had crafted a constitutional principle rather than a simple conflicts rule. Justice Lebel sought to draw a clearer distinction between the constitutional and private international law dimensions of the test. The constitutional dimension of the rule concerns the territorial limits of jurisdiction. The real and substantial connection test establishes boundaries within which conflicts rules could be applied. The purpose of the constitutionally-imposed territorial limit is to ensure the existence of the relationship or connection needed to establish the legitimate exercise of state power. A weak or hypothetical connection casts doubt on the legitimacy of the exercise of state power over the affected persons. In contrast, conflict rules decide when jurisdiction can be assumed over a dispute, what law will govern a dispute, or how an adjudicative decision from another jurisdiction will be recognized and enforced. As Lebel J. stated, at para. 33, “The constitutional territorial limits … are concerned with setting the outer boundaries within which a variety of appropriate conflicts rules can be elaborated and applied.”

[55] In recognizing the need to develop an appropriate framework for the assumption of jurisdiction based on the real and substantial connection test, Lebel J. specified, at para. 73, that the framework for the assumption of jurisdiction cannot be “an unstable, ad hoc system made up on the fly on a case-by-case basis — however laudable the objective of individual fairness may be.” He went on to say, at paras. 78-79:

In my view, identifying a set of relevant presumptive connecting factors and determining their legal nature and effect will bring greater clarity and predictability to the analysis of the problems of assumption of jurisdiction, while at the same time ensuring consistency with the objectives of fairness and efficiency that underlie this branch of the law.

From this perspective, a clear distinction must be maintained between, on the one hand, the factors or factual situations that link the subject matter of the litigation and the defendant to the forum and, on the other hand, the principles and analytical tools, such as the values of fairness and efficiency or the principle of comity. These principles and analytical tools will inform their assessment in order to determine whether the real and substantial connection test is met. However, jurisdiction may also be based on traditional grounds, like the defendant’s presence in the jurisdiction or consent to submit to the court’s jurisdiction, if they are established. The real and substantial connection test does not oust the traditional private international law bases for court jurisdiction.

[56] Fairness, efficiency, and comity inform the test but are not stand alone connecting factors. At para. 84, Lebel J. specifically excluded “general principles or objectives of the conflicts system, such as fairness, efficiency or comity” from the list of presumptive connecting factors, although he did note that these principles may influence the appropriateness of new factors.

[57] Justice Lebel outlined a list of presumptive connecting factors for torts. The onus is on a plaintiff to establish that one or more of the presumptive factors exists. If one or more of the presumptive connecting factors applies, the court should assume that it has jurisdiction over the claim. However, the presumption of jurisdiction is rebuttable. A defendant may rebut the presumptive effect of any of the factors to demonstrate that the court lacks jurisdiction. To do so, the defendant must establish, as outlined at para. 95, that the factor “does not point to any real relationship between the subject matter of the litigation and the forum”, or that the relationship between the subject matter and the forum is weak.

[58] The Supreme Court set out the following four, non-exhaustive presumptive connecting factors for tort cases that, prima facie, entitle a court to assume jurisdiction over a dispute:

(a) the defendant is domiciled or resident in the province;

(b) the defendant carries on business in the province;

(c) the tort was committed in the province; and

(d) a contract connected with the dispute was made in the province.

[59] At para. 91, Lebel J. described the following considerations to assist in identifying new presumptive factors:

(a) similarity of the connecting factor with the recognized presumptive connecting factors;

(b) treatment of the connecting factor in the case law;

(c) treatment of the connecting factor in the statute law; and

(d) treatment of the connecting factor in the private international law of other legal systems with a shared commitment for order, fairness and comity.

[60] Justice Lebel also discussed whether a court would be limited in hearing only that part of a multijurisdictional claim that could be directly connected with the jurisdiction. In holding that a court would not be limited in such a manner, he explained at para. 99 that “[t]he purpose of the conflicts rules is to establish whether a real and substantial connection exists between the forum, the subject matter of the litigation and the defendant.” Where a real and substantial connection exists “in respect of a factual or legal situation, the court must assume jurisdiction over all aspects of the case.”

[61] Jurisdiction may therefore be based on traditional grounds such as presence or consent, or on the existence of a real and substantial connection. Moreover, as stated in Beals v. Saldanha, the former may bolster the latter.

[62] That traditional grounds are an appropriate basis for jurisdiction was reiterated in Chevron Corp. v. Yaiguaje, 2015 SCC 42 (CanLII), [2015] 3 S.C.R. 69, a case involving an action for recognition and enforcement of a foreign judgment in Ontario. In such an action, there is no need to establish a real and substantial connection between the enforcing forum and either the judgment debtor or the dispute.

[63] Of course, despite having jurisdiction, a court has discretion to decline to exercise its jurisdiction and to stay the proceedings based on the doctrine of forum non conveniens.

The court continues to consider the same with respect to the doctrine of forum non conveniens:

[120] The motion judge also decided that jurisdiction should be declined on the basis of forum non conveniens. I will now turn to this issue.

[121] In Van Breda, at para. 110, Lebel J. set out a list of non-exhaustive factors to consider in the forum non conveniens analysis: the location of the parties and the witnesses; the cost of transferring the case to another jurisdiction or declining the stay; the impact of a transfer on the conduct of the litigation or on related or parallel proceedings; the possibility of conflicting judgments; problems related to recognition and enforcement of judgments; and the relative strength of the connection of the parties.

[122] The burden is on the respondents to show that another jurisdiction has a real and substantial connection to the claim and also the availability of a clearly more appropriate forum than Ontario: LaPointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30 (CanLII), [2016] 1 S.C.R. 851, at para. 52, and Van Breda at paras. 103-105. As stated in Van Breda at para. 104: “Forum non conveniens recognizes that there is a residual power to decline to exercise jurisdiction in appropriate, but limited, circumstances in order to assure fairness to the parties and the efficient resolution of the dispute.” Consistent with the need to identify a clearly more appropriate forum than Ontario, the principle of comity informs the application of forum non conveniens.

[123] The motion judge accepted the respondent airlines’ arguments that Ontario was forum non conveniens and suggested that AFCs pursue individual actions within their own jurisdictions. However, she failed to ask whether any jurisdiction was clearly more appropriate than Ontario. This was in error.

[124] I would note that, in concluding Ontario was not the appropriate forum for the AFCs’ claims, the motion judge relied extensively on this court’s decision in Kaynes v. BP, PLC, 2014 ONCA 580 (CanLII), 122 O.R. (3d) 162. In Kaynes, Sharpe J.A. held that the United States and United Kingdom were more appropriate forums than Ontario for a class proceeding involving a claim in misrepresentation arising out of share purchases, the bulk of which were made on foreign exchanges.

[125] An examination of the facts in Kaynes reveals why Kaynes is distinguishable from the present case. First, the appellant in Kaynes was able to point to specific alternative fora that were more appropriate than Ontario, which the respondents here have failed to do. Second, litigation had commenced in the U.S. with respect to the exact same claims that the representative plaintiff sought to litigate in Ontario, whereas the claims put forth in the present class proceeding, dealing with shipments from or to Canada, are not the subject of any other existing proceedings. Indeed, the representative plaintiffs seek to exclude those claims relating to shipments between Canada and countries with ongoing proceedings arising from the same alleged conspiracy. Third, the majority (over 99%) of the proposed class in Kaynes lacked a link to Canada, as they had purchased shares outside of Canada. In contrast, to be part of the class in the present proceeding, an AFC must have purchased air freight services from or to Canada. Lastly, the substantive claims in Kaynes rested in part on U.S. securities law, unlike the claims in the present case, which rest solely on Canadian law.

[126] I would also observe that in a subsequent decision of this court in Keynes v. BP, P.L.C., 2016 ONCA 601 (CanLII), 133 O.R. (3d) 29, the same panel decided that the stay that it had previously imposed on the Ontario action based on forum non conveniens was to be lifted. This was because it had become clear that the plaintiffs could not proceed with a claim in the proceedings in the United States as had previously been anticipated and the claim was now conceded to be governed by Ontario law. Another forum was not clearly more appropriate.

[127] In this case, there is no such forum. Furthermore, the evidence clearly demonstrates a robust connection between the parties and Ontario. All of the respondents carry on business in Ontario, as do at least two of the representative plaintiffs. To be part of the class, AFCs must have purchased air freight services from the respondents for shipments from or to Canada. Based on the respondents’ own evidence, the majority of these services were rendered for shipments from or to Ontario. Some of the events in furtherance of the conspiracy claim unfolded in part in Ontario. Litigation relating to these same claims has not been brought in another jurisdiction and if it is in the future the plaintiffs are excluded from the class. The evidence of the respondents disclosed a minimum of 11,000 customers in Ontario for shipping services that arguably were impacted by the conspiracy.